Blockchain, cryptocurrency, and Bitcoin are buzzwords that have been around for a while but have been subject to considerable hype and speculation in the last couple of years. It is easy to concentrate on other things until this hype and speculation settles down and genuine accurate insights emerge. Let’s take a deep yet understandable dive into how it works.
Blockchains and Secure Transactions
Blockchains are formed by networks of computers that contain a ledger of financial transactions commonly known as the blockchain. Each transaction is a block which contains all the information about a specific transaction. This includes dates, currency, amount, who is getting paid and who is sending it, and the good or services the transaction is for. Note, that users of blockchains create usernames to protect personal identities and this is also a digital signature.
When a transaction is created it goes through a verification process. Unlike standard transactions which are verified via the banking industry, the process is verified by the network computers in the blockchain, which could be hundreds, or thousands of computers. So, if you purchased goods from an online retailer, the network would check the digital signatures, amounts involved, currencies, dates, times, and everything else.
Once the networked computers verify the transaction has taken place, this is added into the blockchain creating a code which is almost impossible to alter or hack. This code is called a hash and is unique to the transaction. Once added details can be seen and reviewed by the public although username details are private.
Blockchains tends to utilise cryptocurrencies such as bitcoins but it also uses conventional currency too.
Blockchains are being utilised more and more for business. They tend to save costs as banking fees are negated but they also streamline workflow. This is especially realised in the following areas:
Blockchains are also improving supply chain management especially if international shipping is involved. Customs clearance information, certifications, and every piece of information needed are contained in the block. This speeds up clearance and saves cost. To do this by conventional means often means a small army of middlemen who all need paying. With blockchain much of the process is streamlined resulting in a business getting materials faster and cheaper.
This also means that if your business relies on purchasing raw materials or components, a blockchain could speed up delivery and save costs.
Given the high security levels of a blockchain to alter a transaction requires a hacker to alter the transaction on every computer in the network. This can potentially be millions even billions. As such, storing sensitive information becomes a real option. Smart contracts can be generated using blockchains. All the necessary information can be recorded and once verified the agreement is legally binding. All sensitive information can be encoded into the block using a private key.
On the same theme of smart contracts information such as patient records could be stored on a blockchain. This would be protected by a private key so that sensitive information could be released only by the patient as and when needed. It could, with the patient’s permission be shared among the medical community. This would make getting second opinions easier by both patients and doctors and provide an up to date medical record minimising medical error and assisting diagnosis.
Embracing blockchain now is prudent. Given the speed accuracy and security offered by blockchain transactions you could find your business runs smoother and workflow and productivity is increased simply by conducting your transactions via blockchain and not via conventional means.